IBRA hopes to collect more than $2b from loan sale
The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) is optimistic it can obtain at least Rp 20 trillion (about US$2.21 billion) in proceeds from the current sale of some Rp 145 trillion in bank loan assets.
IBRA deputy chairman for Asset Management Credit (AMC) Mohammad Syahrial said on Thursday the figure only represented the minimum amount, as a complete assessment of the bids, submitted by bidders on Wednesday, had yet to be done.
"That's the minimum; it could be more. Overall, I'd say that a recovery rate of up to 25 percent is attainable," Syahrial told a media gathering.
The agency has been hoping for a recovery rate of 20 percent to 30 percent on the face value of the loans.
However, Syahrial went on, the Rp 20 trillion alone would be enough to lift the rupiah to around Rp 8,000 against the U.S. dollar by the end of the year.
"Especially when the winning investors (foreign) make their payments because they will have to convert their funds into the local unit. Even if the loans are in dollars, we still have to convert them into rupiah before we hand the payments over to the government," he said.
Of the total loans, 46 percent are valued in dollars.
The loans are a combination of unrestructured and restructured nonperforming loans. IBRA took over the loans from ailing banks and closed down banks in the late 1990s during the financial crisis.
The agency is mandated to restructure the loans and sell them to raise cash to help finance the state budget deficit. IBRA is tasked to raise some Rp 42 trillion this year including from the sale of loan assets and other forms of fixed assets taken over from indebted bank owners.
The rupiah has been under pressure lately due to strong demand from the corporate sector to repay foreign debts. The local unit is currently hovering around the level of Rp 9,000 per dollar, compared with around Rp 8,500 in April. The state budget assumes an exchange rate of Rp 8,000 per dollar.
Syahrial said that investors who submitted bids below the floor price set by IBRA would be allowed to make a new offers.
"If we can work hard in negotiating with those investors to increase their bids, the figure (proceeds) could eventually increase," he said.
He refused to name how many investors had made bids below the required floor price.
The price was set by the agency and is aimed at keeping the recovery rate at a respectable level.
IBRA Chairman Syafruddin Temenggung has said that the agency would cancel the sale and repackage the loans if the bidders continued to offer a lower price up to the August deadline.
As for addressing lingering fears that old debtors might buy back their assets at huge discounts, the agency said it would do whatever it was capable of to prevent that from happening.
Sumantri Slamet, IBRA deputy chairman, said that currently the legal review was still ongoing, one of the main tasks of which was to identify whom the bidders were.
"And if the investors turn out to be the old debtors, we shall cancel the transactions," he said.
The government has ruled that the old debtors must not be allowed to repurchase their debts from the agency.
Nevertheless, many would argue that such a move would be insufficient to prevent old debtors from repurchasing their assets.
Analysts have repeatedly said it would be almost impossible for the agency to trace old debtors if they acted through third parties.
IBRA said that it had received official bids from 203, or 82 percent of 248 investors who had submitted a written expression of interest and had registered to bid. Of those who had registered, 91 were foreign investors.
IBRA will select the winning bidders on July 24.